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Friday, June 24, 2011

United States and International Energy Agency, jointly announced they would release combined 60 million barrel of oil into the international market.

US shall sell around 30 million barrels from the Strategic Petroleum Reserve (SPR) better known as emergency reserve.

According to US energy secretary, unrest in Libya and Middle East hampering crude supply which could cause the global ramifications, was the reason behind it.

In reality this is the way to stimulate the economy, more supply of crude shall result in lower crude prices, and it shall act as tax cut for US businesses and saving for common people.

30 million barrel crude, which US shall release, is just 4.2 % of SPR and more such moves could come in future.

As US is under debt pile with US debtapproaching 100% of its GDP along with ‘Debt Ceiling raise’ being challenged by republicans , US fears double dip recession in time to come; and this move appears as an attempt to cast off the impending fear.

It is skeptical how viable this move shall be, as crude released is just equivalent to one day of global oil consumption but this move is so far helped to drag oil prices down.